Chanos To For-Profit Education: 'If This Is Such A Great Business, Why Don't You Lend Money Yourselves'

Billionaire short-seller Jim Chanos shared his thoughts on the
deficit deal failure, regulation, the eurozone crisis and his
value traps during an interview Wednesday on Bloomberg Television.

After the super committee failed to reach an agreement, the
founder of hedge fund Kynikos Associates said businesses will
always try to point to something outside of the boardroom.

"I don't think anyone expected a deficit deal," he said.

"The system is broken. That's why people are so
frustrated."

Chanos, who has been a supporter of President Barack Obama, said
he has been making his policies and is "actually showing some
resolve."

Regulation

There's been a great deal of ire directed at Wall Street, which
has been hit with a spate of financial regulations.

Chanos thinks the hedge fund are being treated fairly.

"I think broadly about the hedge fund industry is we were not the
culprit in '08. I think Washington realizes that. I
think hedge funds were treated fairly in Dodd-Frank. Our
industry did not take taxpayer money."

Europe

In Europe, the issue is more problematic where hedge funds and
private equity firms are seen as speculators, Chanos said.

Chanos, a noted short-seller, said he couldn't short the European
banks because of the ban on short-selling.

"I think the ban itself has made the funding crisis worse."

For-Profit Education Business Flawed

Chanos sees a variety of value traps such as for-profit
education, digital distribution and the China bubble.

He thinks the for-profit education's business model is
flawed.

"I think the business model is flawed because it all depends on
the taxpayer," Chanos told Bloomberg's Betty Liu. "None of
the companies can exist without federal loan guarantees."

"If this is such a great business, then why don't you lend money
yourselves than depend on a federal handout," he added.

"I don't want to have to pay for their failing as a taxpayer."

Short Game Stop

He told Bloomberg he is short videogame retailer Game Stop.

"The Internet is the most efficient distribution network ever
devised. Anybody in the business of selling you a physical
product that is digitized is seeing their margin collapse
overtime."

Short China

Chanos recently returned from a trip to Asia and he told
Bloomberg he is more bearish than ever upon returning.

One reason, he explained, is the fragile banking system.

"The banking system is extremely fragile," he said. "The
Chinese banking system was not recapitalized. It was
papered over."

"The Chinese banking system is built on quick sand."

Another indicator Chanos pointed to for shorting China is this
growing sense that the Chinese government will ease.

"We point out that credit will grow 30-40% of GDP," he said
indicating that's too high.